Oct 21, 2024
Your personal finance management includes understanding your spending habits, creating a budget, investments, savings, retirement, and more.
And even with careful planning, you can still run into unexpected expenses.
But the more you know, the more confident you’ll feel about achieving your short- and long-term financial goals.
You can start improving your financial literacy today by learning how others manage their money. Then, develop your own personal finance best practices to follow now and in the future.
Check out these 6 personal finance facts and see how they can help you manage your own money better.
Total household debt in the U.S. adds up to trillions of dollars. So, if you have debt, you’re not alone. The important thing is to have a plan for paying it back in a way that works with your budget.
Start planning now if you haven’t already, and put your plan into action today. Assessing your total monthly income and expenses is a good first step. This will help you get an idea of where you might be able to reallocate funds to debt repayment.
If you have debt that is keeping you from reaching other financial goals, there are ways to pay it down and manage it within your budget.
American credit card holders carry an average of more than $6,300 in credit card debt, according to Transunion.
While credit cards are quite useful, you may find it challenging to pay higher-interest balances down as you continue to use the revolving debt.
A debt consolidation loan may help you manage that credit card debt. You could use debt consolidation to combine several credit card balances into one fixed rate, fixed term loan. This loan would have one set regular monthly payment and a defined repayment term. In addition to simplifying your life and possibly helping you pay your debt off sooner; you could also save money on interest.
The longer you have debt, the more it will cost you. As an example, imagine you have a balance of $15,000 in credit card debt with an annual percentage rate (APR) of 19%, and your monthly payment is $297.
In the end, carrying that debt would cost you more than $15,000 in interest (assuming you don’t make any new purchases). And it would take you more than eight years to pay off. In other words, you’d pay as much in interest as you have in credit card debt.
Some people even cope with higher interest rates by lowering their monthly payments on credit cards; this strategy would result in paying even more interest and taking a longer time to reduce the debt.
The bottom line? It’s always a good idea to find manageable ways to reduce higher-interest debt. Once you are debt-free, you can redirect those payments toward other important goals, like saving for a house or retirement.
A study by the Kaiser Family Foundation (KFF) found that 41% of Americans have health care debt; this includes charges for health care on their credit cards, owing money to family who’ve helped pay, and unpaid medical bills.
Struggling to pay for medical costs can be stressful, especially if you’re already dealing with medical debt. The same KFF study shows that people with medical debt may skip getting care or paying other bills as a result of this burden.
But with some thoughtful planning, you can pay off your medical debt and get back on the road to financial wellness. In addition to careful budgeting, a personal loan could be a key part of the solution.
Many people use personal loans to cover major expenses like a home renovation or a special vacation. But a personal loan can help you build savings, too.
For example, when you consolidate debt with a personal loan, you could put any money you save in interest toward an emergency or retirement fund.
Explore this simple budgeting strategy to help you organize your finances. Then you can decide if a personal loan might be right for you.
The average FICO® Score* in the U.S. rose for several years, even through the pandemic, and it held steady through 2022. It recently dipped slightly as Americans struggle to manage high-interest debt.
Your credit score is an indicator of your credit health and creditworthiness should you need to borrow. It’s helpful to understand the role your credit score plays in your personal finances so you can work to improve it, if necessary.
Personal finance is a complicated subject, and everyone’s situation is different. For some people, medical or credit card debt is a top concern. Others might worry about how they’ll pay for emergency expenses or college tuition.
But whatever your financial goals might be, being proactive can help. Educating yourself about personal finance and exploring options for reducing your debt, like a personal loan, are important first steps.
With the right knowledge and consistent action, you’ll start hitting your financial milestones. Then, you can start to enjoy managing your money.
* FICO is a registered trademark of Fair Isaac Corporation in the United States and other countries. Discover Financial Services and Fair Isaac are not credit repair organizations as defined under federal law or state law, including the Credit Repair Organizations Act. Discover Financial Services and Fair Isaac do not provide “credit repair” services or assistance regarding “rebuilding” or “improving” your credit record, credit history or credit rating.
